Tribunal upholds depreciation claim for charitable assets despite Revenue's appeal.

The Tribunal dismissed the Revenue's appeal and upheld the Commissioner's decision to allow the assessee's claim for depreciation on assets utilized for charitable purposes. Despite the Revenue's argument of potential double deduction, the Tribunal relied on previous decisions and the Bombay High Court's ruling to support the allowance of depreciation. The Tribunal found no grounds to interfere with the Commissioner's order, affirming the depreciation claim for new assets acquired and used for charitable activities by the trust.

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Issues:
Allowance of depreciation on assets claimed as part of utilisation by a trust registered under section 12A of the Income-tax Act, 1961.

Analysis:

1. Background:
The appeal filed by the Revenue challenges the decision of the Commissioner of Income-tax (Appeals) allowing the claim of depreciation on assets, the cost of which was considered as part of utilisation by the assessee, a trust registered under section 12A of the Income-tax Act, 1961.

2. Legal Precedents and Arguments:
The Assessing Officer disallowed the depreciation claim based on a decision of the apex court in Escorts Ltd. v. Union of India [1993] 199 ITR 43 (SC). The assessee relied on the decisions of the Tribunal in various cases, including Asst. CIT v. Shri Adichunchanagiri Shikshana Trust [2012] 19 ITR (Trib) 828 (Bang), to support their claim for depreciation.

3. Tribunal's Decision:
The Tribunal considered the issue of allowing depreciation on assets cost claimed as utilisation by the assessee. Referring to previous decisions, including Dr. T. M. A. Pai Foundation and Asst. CIT v. Shri Adichunchanagiri Shikshana Trust, the Tribunal held that depreciation on new assets acquired and utilized for charitable purposes should be allowed, even if the entire cost of the assets was claimed as application of income.

4. Arguments and Rulings on Depreciation:
The Revenue contended that allowing depreciation on assets claimed as utilisation results in double deduction, citing the Escorts Ltd. case. However, the Tribunal upheld the Commissioner's decision, emphasizing that previous Tribunal decisions and the hon'ble Bombay High Court's ruling supported the allowance of depreciation in such cases.

5. Final Decision:
After considering all arguments and legal precedents, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's decision to allow the assessee's claim for depreciation on new assets acquired and used for charitable purposes. The Tribunal found no reason to interfere with the Commissioner's order.

In conclusion, the Tribunal upheld the allowance of depreciation on assets claimed as utilisation by the trust, following established legal principles and previous decisions. The appeal by the Revenue was dismissed, affirming the decision in favor of the assessee.

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